Earnings Miss: Motherson Sumi Wiring India Limited Missed EPS By 7.5% And Analysts Are Revising Their Forecasts

Motherson Sumi Wiring India Limited (NSE:MSUMI) shareholders are probably feeling a little disappointed, since its shares fell 4.5% to ₹82.40 in the week after its latest second-quarter results. It was a pretty mixed result, with revenues beating expectations to hit ₹18b. Statutory earnings fell 7.5% short of analyst forecasts, reaching ₹0.37 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out the opportunities and risks within the IN Auto Components industry.

Taking into account the latest results, the consensus forecast from Motherson Sumi Wiring India's nine analysts is for revenues of ₹71.5b in 2023, which would reflect a notable 8.5% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 42% to ₹1.99. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹69.3b and earnings per share (EPS) of ₹1.95 in 2023. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of ₹95.80, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Motherson Sumi Wiring India at ₹145 per share, while the most bearish prices it at ₹69.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 18% growth on an annualised basis. That is in line with its 22% annual growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 14% per year. So although Motherson Sumi Wiring India is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Motherson Sumi Wiring India's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Motherson Sumi Wiring India going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Motherson Sumi Wiring India that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.